Abstract: To determine the impact of environment on the combining ability of bread wheat eight genotypes were crossed in a diallel fashion and the resulting material was grown under irrigated as well as drought stress conditions. Data collected on yield and related traits revealed highly significant differences among genotypes under both sowing conditions. Combining ability analysis revealed that GCA mean squares were significant for flag leaf area, plant height, grains per spike and 1000-grains weight under irrigated condition while GCA mean squares were significant for flag leaf area, plant height, tillers per plant and 1000-grains weight under drought stress condition. Mean squares due to SCA were highly significant for all the traits under both sowing conditions. It was revealed that additive effects were more important than the dominant for almost all the characters under both sowing conditions which indicated the importance of additive variation for the inheritance of these characters. The presence of both additive and non-additive variability suggested the utilization of certain genotypes and crosses to evolve new wheat genotypes for irrigated as well as drought environments e.g., parental genotypes like Parula, MH.97 and 87094 and specific crosses like 85205 H MH.97, Parula H MH.97, Parula H 87094, Crow H MH.97 and Chak.97 H Kohis.97.